Special Master Urges Supreme Court to Rule for Rutledge-led Coalition on Millions Owed in Unclaimed MoneyGram Funds

LITTLE ROCK – Arkansas Attorney General Leslie Rutledge issued a statement following the report submitted to the U.S. Supreme Court by Special Master Judge Pierre N. Leval. The report recommends that the Supreme Court rule in favor of a bipartisan, 29-state coalition led by Attorney General Rutledge and hold that this coalition is entitled to more than $200 million dollars in unclaimed funds that MoneyGram Payment Systems, Inc., improperly sent to Delaware. If the Supreme Court adopts the report’s recommendation, Judge Leval will then conduct further proceedings to determine precisely how much money Delaware owes Arkansas and each of the 28 other states in its coalition. Arkansas is owed upwards of $650,000 on unclaimed funds.

“I will fight for every dollar that belongs to the people of Arkansas,” said Attorney General Rutledge. “Delaware has been holding Arkansans’ money hostage for years. The Special Master’s report brings us close to a total victory, and I look forward to representing a majority of states before the Supreme Court.”

The dispute between the Arkansas-led coalition and Delaware is about which state is entitled to the funds payable on unclaimed “official checks” sold by MoneyGram, a money transfer services company that operates in all 50 states and internationally. At Delaware’s behest, hundreds of millions of dollars in unclaimed MoneyGram official checks have been wrongfully “escheated,” or turned over, to Delaware. Misapplying federal law, Delaware instructed MoneyGram to escheat unclaimed official checks to Delaware, because MoneyGram is incorporated under Delaware law.

In 2015, an independent auditor completed an examination of unclaimed “official checks” from MoneyGram and concluded that over $200 million was owed to those states, but MoneyGram had improperly paid it to Delaware. According to that audit, Arkansas was owed over $650,000 payable on unclaimed “official checks.”

In 2016, the Arkansas-led coalition sued Delaware in the U.S. Supreme Court, which can hear lawsuits between states without waiting for a lower court decision. Arkansas and the other states argued that the federal Disposition of Abandoned Money Orders and Traveler’s Checks Act required MoneyGram to escheat each unclaimed official check to the state where it was sold, not to the state of MoneyGram’s incorporation. As a result, Arkansas’s coalition asked the Supreme Court to order Delaware to repay all the unclaimed funds that it had wrongfully received from MoneyGram.

The Supreme Court appointed Judge Leval, who sits on the U.S. Court of Appeals for the Second Circuit, to serve as Special Master. His duties included taking evidence and issuing a report recommending how the Supreme Court should rule on this case. Now that Judge Leval has issued his report and recommended a ruling against Delaware, that state will have the opportunity to file objections with the Supreme Court. Once Arkansas’s coalition has responded, the Supreme Court may hear oral argument and will then issue a decision.

The coalition is led by Arkansas, with additional leadership from California, Texas and Wisconsin. The other states in the coalition are Alabama, Arizona, Colorado, Florida, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, Utah, Virginia, Washington, West Virginia and Wyoming. Pennsylvania is also allied with Arkansas’s coalition but is led by separate counsel.

Special Master’s Docket

Special Master’s Decision

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